6 Companies Poised to Clean Up Japan

by Susan J. Aluise | April 15, 2011 1:18 pm

More than a month after a 9.0-magnitude earthquake and tsunami triggered a nuclear crisis at four of the six reactors and spent fuel pools at Japan’s Fukushima I nuclear plant, operators and government officials still are struggling with questions of how to resolve the continuing crisis.

The plant operator, Tokyo Electric Power,already has said the reactors will be scrapped rather than repaired. But the reactors have to be cooled down before they can be decommissioned – a process that could take until June. After that, the extensive and intricate cleanup of the site could take up to 30 years and cost as much as $10 billion.

Needless to say, the expertise required for such a daunting task is highly specialized. Three groups – led by Hitachi (NYSE:HIT[1]), Toshiba (PINK:TOSBF[2]) and France-based Areva —have submitted proposals to clean up and decommission the plant. While little detail is known about the specifics of the three plans, here are six companies whose earnings could get a boost from a role in the recovery:

1. Hitachi. The company, which supplied one of the boiling water reactors at the Fukushima I plant, leads a consortium that includes General Electric’s (NYSE:GE[3]) nuclear division. GE designed all six reactors in place at the plant and built three of them; Hitachi supplied one of the reactors.

2. Toshiba. The leader of the second consortium, Toshiba developed two of the Fukushima I reactors – one of which is the MOX-fueled Unit 3. The ongoing crisis at that unit has raised serious concerns about release of plutonium, which is far more dangerous than conventional, highly enriched uranium fuel. The Toshiba cleanup plan reportedly will take a decade to complete. Toshiba owns Westinghouse Electric, which is a major designer of nuclear pressurized water reactors and a developer of nuclear fuel.

3. Exelon (NYSE:EXE[4]). The U.S. nuclear plant operator, which developed the blueprint and managed decommissioning of the Three Mile Island cleanup, is part of the Hitachi consortium, as is privately held Bechtel.

4. Shaw Group (NYSE:SHAW[5]).The company, which has played a major role in building 17 U.S. nuclear plants, is part of the Toshiba consortium. The company is a partner with Westinghouse in the new MOX-fueled AP1000 project in the People’s Republic of China.

5. Babcock & Wilcox (NYSE:BWC[6]).Since the disaster, Babcock & Wilcox, which has no operations in Japan, has beenproviding nuclear technical assistance and security at Fukushima I. The company, also part of the Toshiba consortium, is working on nuclear decommissioning and decontamination operations for the U.S. Department of Energy.

6. Fluor (NYSE:FLR[7]).You could saythat Fluor has more than a little experience with managing complex nuclear decommissioning and decontamination programs – it’s managing the massive cleanup of the Hanford Nuclear Reservation in Richland, Wash. The massive Hanford complex, epicenter of nuclear weapons fuel development during the Cold War, contains 11 metric tons of weapons-grade plutonium and more than 60 million gallons of liquid nuclear waste stored underground in leaking casks.

Bottom Line: Betting on companies like these is notprofiting from radiological disaster. The Fukushima I nuclear plant is catastrophically crippled and needs to be decommissioned and the surrounding area decontaminated as soon as possible. The situation is so complex, the best technology and intelligence will need to be leveraged — and leveraged quickly — to get the disaster under control before it does even more damage. That’s the short-term bump for the winning team.

The longer-term outlook is harder to predict. In the coming months, there will be extensive debate over nuclear power safety and many projects on tap will be delayed or even cancelled. But the lessons these companies learn on the ground at Fukushima I will be invaluable in positioning the industry for resurgent growth. The pendulum always swings back. After all, nuclear power did come back into vogue after Three Mile Island.

As of this writing, Susan J. Aluise did not hold an interest in any of the companies named here.